Bancroft Company's income statement for Year 2 follows:

Sales536,250

Cost of goods sold222,750

Gross margin313,500

Selling and administrative expenses112,875

Net operating income200,625

Nonoperating items:

Gain on sale of equipment7,500

Income before taxes208,125

Income taxes83,250

Net income$124,875

Its balance sheet amounts at the end of Years 1 and 2 are as follows:

Year 2 Year 1

assets

Cash$116,550 $62,475

Accounts receivable165,750 102,750

Inventory239,250 204,000

Prepaid expenses7,875 15,750

Total current assets529,425 384,975

Property, plant, and equipment471,000 380,250

Less accumulated depreciation124,050 98,925

Net property, plant, and equipment346,950 281,325

Notes Receivable30,000 0

Liabilities and Stockholders' Equity

Year 2 Year 1

Accounts payable $234,750 $192,000

Accrued liabilities 35,250 43,500

Income taxes payable 63,525 61,050

Total current liabilities $333,525 $296,550

Bonds payable 151,500 87,750

Total liabilities $485,025 $384,300

Common stock 252,000 213,000

Retained earnings 169,350 69,000

Total stockholders' equity 421,350 282,000

Total liabilities and stockholders' equity $906,375 $666,300

Equipment that had cost $23,700 and on which there was accumulated depreciation of $7,875 was sold

during Year 2 for $23,325.The company declared and paid a cash dividend during Year 2. It did not retire any

bonds or repurchase any of its own stock.

1. Show the calculation for Equipment purchases, if any, using either a t-account or formula.
2. Show the calculation for Depreciation using either a t-account or formula.
3. Show the calculation for Dividends using either a t-account or formula.
4. Create a statement of cash flow for Year 2 using the indirect method.Include proper descriptions for activities.